Military Tax Benefit: Primary Residence Exclusion

Welcome to Curt's Chalk Talk. I'm Curt Sheldon with C.L. Sheldon, and Company, and today I'd like to talk to you about one of your military tax benefits. And that has to do with exclusion, from income, any profit up to $500,000 on the sale of your primary residence.

Now, most Americans can exclude this from income if they have lived in the house for two of the last five years. But there's an exception for the military. If you move, and this is important, pursuant to military orders, your clock is suspended for up to 10 years.

So, it would work something like this. You move into the house, you live in it for two years, then you move out, because of orders. The clock stops for up to 10 years and then it starts again, and you have three more years to sell the house and still qualify for the primary residence exclusion.

Now, what happens if you leave the service before this all runs out? Well, the law's a little bit unclear, but I'm of the opinion that if you say, move at the, leave the service at the eight-year point, we would go eight years and then add three, for a total 13 years.

Military taxes are not easy, and the transition from the military can be even more complicated. If you'd like a checklist to help you, go to www.clsheldon.com/tax, that's www.clsheldon.com/tax. And by the way, it's free.